Home Buying in Sacramento>Question Details

stephenr, Home Buyer in Sacramento, CA

we got our offer accepted on a short sale, we are 39k less then the original listing, if the house appraises higher will the bank reject our offer?

Asked by stephenr, Sacramento, CA Mon Oct 1, 2012

Help the community by answering this question:


As the short sales rate remains high, more banks are agreeing to sell properties for less than loan value to recoup some of their investment and assist homeowners in avoiding foreclosures. Generally speaking, the negotiator will counteroffer you with the price that they would like to acquire for this property. It will be up to you to accept or reject it.

Best of Luck,

Maria Cipollone

http://www.Century 21

3 votes Thank Flag Link Tue Oct 2, 2012
I would expect the bank to tell the seller they want the higher price to approve the short sale. In other words the seller will ask you to come up to the price the lender will accept.
1 vote Thank Flag Link Tue Oct 2, 2012
I am involved in a short sale right now where this very issue is playing out....our offer is at a number we were told the bank accepted a few months back based on a BPO, then that deal fell apart. Our thought was that by offering exactly that amount we would "cruise" (if one can do that in a short sale?!) to bank approval and close. But time had passed and the bank ordered another BPO. This time the property value came in $30K higher so the bank will not accept our offer based on that.

We are in the process of reevaluating - the bank has ordered an appraisal which I was surprised they would do so close to the last BPO. We have our fingers crossed that it will come in close enough to our number that we will be able to get the deal done.

Jeanne Feenick
Unwavering Commitment to Service, Unsurpassed Results
1 vote Thank Flag Link Tue Oct 2, 2012
The short sale lender will complete their own BPO (broker price opinion) or full appraisal to determine market value. THAT will be the value that they want to accept as the price of the home. They will never tell you what exactly that price is but it should be within range of what you offered on the home.

The original list price set by the listing agent has no factor in that decision, really. If your offer price is lower than what you and your agent determined as the real value, then expect them to counter you during their approval process.

You also might want to understand that California law does not allow a lender to foreclose on the home in the middle of the process, like other states. Not that it couldn't happen by mistake so make sure that you're tracking any sale date, if they are in foreclosure.

In summary, if the lender's appraisal is higher, they will counter you, not reject you. It will be your choice as to whether you accept their higher price, you give evidence to counter to a different price, or walk away.
1 vote Thank Flag Link Tue Oct 2, 2012
If the price you offered was a fair offer, meaning you did a real analysis of area values and structured your offer to be properly aligned, you should be in a good position.

Too often buyers believe that because the owner is in a difficult situation they can come in with a opportunistic offer. There is nothing wrong with a low ball offer as long as you are aware of the short sale process. The bank will not reject your offer but will come back with their own purchase counter.

If the home was listed below market value, the bank will in essence RAISE THE PRICE. Yes, it can be raised even above the listed price. "Surprise!"
If your offer was a low ball, the bank can counter, accept your offer or go for what's behind curtain number 3.

Unfortunately, we don't know what is behind curtain number 3. Here in Florida it could be the potential to roll this home into a bulk purchase deal with Blackstone Investment or any of the other 5 Goliath national investors, after all, Blackstone is on a billion dollar buying spree to acquire rentable real estate.

Based on how you arrived at your purchase offer, you may need to be prepared for the eventual negotiations based on the selling banks appraising process. If you KNOW you are below market and was trolling for a 'real deal' there is a real likelihood you will either raise your offer or be counted among the 70% of short sale offers that fail.

Short sales are the 'Wild, Wild, West of Real Estate," where there exists an illusion of rules but anything can and does happen. Buckle up, it can be a wild ride.
1 vote Thank Flag Link Tue Oct 2, 2012
Hi Stephen,

Congrats on getting into contract! But this is just the first stage. Now that your offer has been accepted by the seller, listing agent would be submitting it to the short sale lender along with the complete short sale package.

Short sale lender will due their due diligence ...get an appraisal and a BPO done and decide if they want to accept your offer the way it is, reject it or counter it...

You would have the same choices once you get short sale lender's counter...accept it, reject it or counter..

Once you and the short sale lender have come to terms on the purchase price..your transaction moves forward to the point where your loan agent will order the appraisal. I

If the appraisal come higher...you now got instant equity in the house and you don't have to do anything... be happy!! they can't tell you to increase the purchase price :-)

But if the appraisal comes in lower than the purchase price and I hope you have appraisal contingency in place... you can negotiate with the short sale lender to reduce the price, pick up the difference yourself or cancel the contract ...get your deposit out.

Hope this help!

1 vote Thank Flag Link Mon Oct 1, 2012
Who accepted the short sale offer the seller or the bank? At the end of the day, the seller is responsible for the deficit one way or another. The banks are aware of the market as they more than likely have had several broker price opinions (BPO) conducted. The questions you should ask are is the seller fully cooperating with the lender in the short sale and have they submitted all the required and requested documents that the lender needs in order to get the file to the negotiator? Be prepared for a long wait. Hopefully you have a walk-away clause in the contract.
0 votes Thank Flag Link Sun Oct 7, 2012
Yes. They will reject the price you offered. When they reject your price they will probably give you 24 hours to agree to the price that they want, before offering it to back up buyers or returning it to MLS active.
These are merely probable. Anything exceptional could happen. See Annette's post: " there exists an illusion of rules but anything can and does happen"
0 votes Thank Flag Link Tue Oct 2, 2012
Jim Walker, Real Estate Pro in Carmichael, CA
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